1.The Financial analysis (Financial Analysis file attached”)
Compute each ratio within the five categories of ratios and interpret. These ratios should be compared with the industry average or the company’s historical performance. Evaluating the company’s overall financial health.
a.Profit ratios: measure the efficiency with which the company uses its resources.
b.Liquidity ratios: a measure of its ability to meet short-term obligations. An asset is deemed liquid if it can be readily converted into cash.
c.Leverage ratios: A company is said to be highly leveraged if it uses more debt than equity, including stock and retained earnings.
d.Activity ratios: indicate how effectively a company is managing its assets.
e.Shareholders’ return ratios: measure the return that shareholders earn from holding stock in the company.